Thursday, 17 November 2011
Don't blame the Europeans
It is in the nature of politicians to find a scape goat to blame if things go wrong. The crisis in the Euro zone fulfills this role for the Westminister government. Mr Cameron and Mr Osborne are blaming the travails of the UK economy on European mismanagement. Oh if it was only so.
Yesterday’s unemployment figures and the downgrading of growth forecasts made by Mervyn King to 1% until the middle of 2012 will undoubtedly lead the Office for Budget Responsibility(OBR) to say that that this downturn will not allow Mr George Osbourne to meet his commitments of eliminating Britain’s debts by 2014-15.
So there we have, it all the pain with none of the gain. The Chancellor got it wrong as this blog kept saying, a higher rate of growth was necessary to prevent damaging public finances wrought by deepening unemployment. The promise made at the time of his first emergency budget that "we are on track to have a balanced current structural budget by the end of the parliament" looks pretty hollow now.
The whole scale surgery to the public sector with the private sector unable or unwilling to take up the slack, has got us into the situation where a million young people between 16 and 24 are out of work and the highest unemployment rate since 1996 of 8.3% with unemployment in Wales reaching 137,000 or 9.3% its highest level since 1992.
The problems with the economy in general and with Wales in particular are deep rooted and can’t be blamed on the Euro zone crisis. Undoubtedly the Euro crisis will now make a bad situation a whole lot worse. After all, over forty percent of the UK’s trade is with Europe and if they fall into recession we’re also going to be in the mire.
So what’s to be done. Well, Osborne needs to use his Autumn statement to try to generate more growth in the economy. He particularly needs to think more creatively as to how to deal with youth unemployment.
In Wales, the budget needs to be changed to push for more capital projects and more emphasis on economic support. More needs to be put into social housing, partly to deal with the large arrears and increased homelessness caused by the recession, but more particularly because house building is a good and quick way of getting the construction industry moving.
But above all there needs to be a Commission established to look at how we deal with the endemic problems of the Welsh economy. Bottom of almost every economic league table is not a good place to be.